Fdi Analysis

AbstractOn the basis of previous studies of foreign direct investment (FDI) in insurance services industries by Moshirian (1997 and 1999), this study applies the similar model and variable with those previous studies to present analysis and discussion about FDI in insurance services industries in America from 1987 to 1998. As the extension on prior studies, this study found that the relative wage rate of the US versus the source countries, and FDI in manufacturing industries both are highly important determinants of FDI in insurance services industries in America in statistic. However, this result is different from Moshirian’s (1997), due to majority of factors which are valued important in his study are unimportant in this study. The disparity between different results indicates that along with the changes of political environment, economic climate, investors’ behaviors and methodological limitation, there are disparate determinants in different periods. As a result, it is necessary to testify it in further investigations.

IntroductionDue to globalization, multinational insurance companies could more convenient than before to develop their insurance services in the US. Busse (2003) points out that foreign direct investments(FDI) have a dramatically growth in 1980s and the total outflow increase to $225 billion in 1990s. The average growth rate of the foreign direct investment is recorded in 34% between 1980s and 1990s. Actually, Moshirian(1997) explains that the growth rate of FDI in insurance services industry is one of the rapidest growing industries in the US. There is almost 5 times growing during 1980 – 1992. Li and Moshirian(2002) describe that at 1980s in the US there are several countries such as United Kingdom, Netherlands, Switzerland, Germany and France are the significant sources of FDI in insurance service. Also, United Kingdom is the largest FDI in insurance service sources which contains 30% of the market shares between 1980s to 1990s....